First

Session, 47th General Assembly

Elizabeth II, 2012

BILL 6

AN ACT TO AMEND THE

CONSUMER PROTECTION

AND BUSINESS PRACTICES ACT

Received and Read the First Time ...................................................................................................

Second Reading .................................................................................................................................

Committee ............................................................................................................................................

Third Reading .....................................................................................................................................

Royal Assent ......................................................................................................................................

HONOURABLE

PAUL DAVIS

Minister

of Service Newfoundland and Labrador

Ordered

to be printed by the Honourable House of Assembly

EXPLANATORY NOTES

This Bill would amend the Consumer Protection and Business Practices

Act to add a division governing distance service contracts.

This Bill would

prescribe information required

to be disclosed by a supplier to a consumer in a distance service contract;

establish the circumstances

under which a consumer or supplier may cancel or amend a distance service

contract;

establish rules regarding

cancellation fees;

establish rules regarding the

use of security deposits;

prescribe information

respecting warranties which is required to be disclosed by a supplier to a

consumer; and

prescribe information required

to be included when advertising goods or services which may be sold or provided

under a distance service contract.

A BILL

AN ACT TO AMEND THE CONSUMER PROTECTION AND

BUSINESS PRACTICES ACT

Analysis

S.2 Amdt.

Definitions

S.23 R&S

Definition

Division heading R&S

S.28 R&S

Definition

5. Division 3 Added

Division 3

Distance Service Contracts

35.1

Interpretation

35.2 Disclosure of

information

35.3 Form of contract

35.4 Renewal of contract

35.5 Amendment of

contract by supplier

35.6 Amendment of

contract by consumer

35. 7 Cancellation of

contract by supplier

35.8 Cancellation of

contract by consumer

35.9 Cancellation

fee fixed term

distance service

contract

35.10 Cancellation

fee indeterminate

term distance service

contract

35.11 Security deposit

35.12 Repair of goods

35.13 Warranties

35.14 Advertising

35.15 Direct sales

contract

35.16 Distance sales

contract

Commencement

Be it enacted by the Lieutenant-Governor and

House of Assembly in Legislative Session convened, as follows:

SNL2009 cC-31.1

as amended

1. Paragraph 2(

i) of the Consumer Protection and Business Practices Act is repealed and the

following substituted:

(i) "services" means services provided

to a consumer for primarily personal, family or household purposes including

(

i) for the maintenance or repair of goods or real

property owned by a consumer,

(ii) in conjunction with the use of social,

recreational or physical fitness facilities,

(iii) in conjunction with the use of cell phones,

residential phones, internet, cable and satellite television and remote

surveillance,

(iv) in respect of the movement, transport or

storing of goods, or

(

v) for educational purposes; and

Section 23 of the Act is repealed and the

following substituted:

Definition

23. In

this Division, Division 3,

Part VIII and

Part X, "direct sales

contract" means an agreement between a consumer and a supplier that is

negotiated or concluded in person at a place other than

(

a) the supplier's place of business; or

(

b) a market place, an auction, trade fair,

agricultural fair or exhibition.

3. The heading in Division 2 is repealed and the

following substituted:

Division 2

Distance Sales Contracts

Section 28 of the Act is repealed and the

following substituted:

Definition

28. In

this Division and Division 3, "distance sales contract" means a

contract for the supply of goods or services between a supplier and a consumer

that is not entered into in person and, with respect to goods, for which the

consumer does not have the opportunity to inspect the goods that are the

subject of the contract before the contract is entered into, but does not

include a prepaid purchase card.

5. The Act is amended by adding immediately after

section 35 the following:

Division 3

Distance Service Contracts

Interpretation

35.1

(1) In

this Division

(a) "cancellation fee" means the total

charges that the supplier may charge to the consumer upon cancellation of a

distance service contract;

(b) "distance service contract" means a service

contract for cell phones, residential phones, internet, cable and satellite television

and remote surveillance, and includes the goods used in conjunction with the

service contract;

(c) "fixed term distance service

contract" means a distance service contract that has a specified term;

(d) "indeterminate term distance service

contract" means a distance service contract that does not have a specified

term;

(e) "security deposit" means a sum of

money that a supplier obtains from a consumer that is in addition to the amount

payable in respect of the goods or services provided for in the distance

service contract; and

(f) "rebate" means a discount on the

price of goods or services.

(2) This Division applies to

(

a) all distance service contracts which are

entered into after the coming into force of this Division; and

(

b) all distance service contracts which are

renewed after the coming into force of this Division, notwithstanding that

those contracts were entered into before the coming into force of this

Division.

Disclosure of information

35.2

(1) A

supplier shall disclose the following information to a consumer:

(

a) the supplier's name, business address,

telephone number and, where applicable, fax number and e-mail address;

(

b) the date and place of the distance service

contract;

(

c) a detailed description of each service to be

provided;

(

d) the monthly rate for each service to be

provided, including the monthly rate for each optional service, or the monthly

cost where the rate is not calculated on a monthly basis;

(

e) the monthly rate for each associated cost or

the monthly cost where the rate is not calculated on a monthly basis;

(

f) the total amount the consumer must pay each

month;

(

g) the applicable restrictions on the use of the

services and the geographical limits, including local service coverage areas,

long distance areas and roaming areas, within which they may be used;

(

h) where applicable, the description and price of

the goods sold or offered at a rebate on the purchase of the service and a statement

that goods to which a rebate is applied are rebated goods, not free goods;

(

i) where applicable, the description of each

service offered at a rebate;

(

j) where applicable, the nature of each rebate

provided by the supplier in consideration of the distance service contract, including

a partial rebate on the sale or lease price of the goods or services purchased

or leased at the time the distance service contract is entered into;

(

k) the total value of each rebate to be used to

calculate the cancellation fee that may be charged to the consumer under subsection

35.9(2);

(

l) the manner of obtaining information on the

rate for the services that are not provided under the distance service contract

and the rate for services that are subject to restrictions or geographical

limits;

(

m) the term and expiry of the distance service

contract;

(

n) without limiting the scope of sections 35.5 to

35.10, the circumstances which allow the consumer or the supplier to cancel or

amend the distance service contract and the related terms and costs or fees, if

any;

(

o) the obligations that must be fulfilled by the

consumer to terminate the distance service contract upon its expiry;

(

p) information related to the existence of

applicable warranties, including manufacturers warranties, which shall include

information respecting the nature and duration of those warranties;

(

q) rates for exceeding usage limits, where

applicable;

(

r) customer service information for the supplier

of services and the supplier of goods;

(

s) customer service obligations of the supplier

of services and the supplier of goods;

(

t) with respect to distance service contracts for

cell phones,

(

i) notification that roaming charges may apply,

(ii) notification of the number of included airtime

minutes and data usage, where applicable, and

(iii) per use charges for incoming text messages,

emails, and subscription text messages, where applicable;

(

u) a statement indicating whether the goods or

services are subject to a technological or physical feature restricting the

functioning of those goods or services to a service provided by the supplier or

another supplier;

(

v) a description of any one-time costs charged by

the supplier, including a sign-up fee or a cost for an action required on the

part of the supplier to activate the service under the agreement;

(

w) a statement that unauthorized or incorrect

charges will be reversed within 30 days of notification by the consumer to the

supplier;

(

x) the supplier's policy respecting unused credit

balances on contract expiry;

(

y) the fee charged for paper invoices and

detailed account statements; and

(

z) any restrictions respecting free or included

services.

(2) The description in subparagraph (1)(

h) shall

state

(

a) whether the goods offered at a rebate are new

or reconditioned; and

(

b) the regular price of the goods.

(3) A distance service contract shall include the

consumers name and address and the information in subsection (1).

(4) The information in subsection (1) shall be

printed in a clear and legible manner at the beginning of the distance service

contract in at least a 10 point font.

Form of contract

35.3

(1) A

distance service contract shall be

(

a) written in plain language which is clear and

concise; and

(

b) provided in paper form.

(2) The requirement to provide a contract in paper

form under paragraph (1)(

b) is not satisfied by the provision of electronic

information as authorized by

section 9 or 10 of the Electronic Commerce Act.

(3) A distance service contract shall be completed

in duplicate and upon execution by both the supplier and the consumer the

supplier shall provide a copy to the consumer.

(4) The consumer's signature shall appear

following the conditions stated in the contract.

(5) This

section does not apply to a distance

service contract which is also a distance sales contract.

Renewal of contract

35.4

(1) The

supplier shall, between 90 and 60 days before the expiry date of the distance

service contract, provide written notice to the consumer of

(

a) the expiry date of the contract; and

(

b) where applicable, the supplier's intent to

renew the contract for an indeterminate term.

(2) A fixed term distance service contract with a

term exceeding 60 days shall not contain a clause which allows the contract to

be automatically renewed upon expiry unless the renewal is for an indeterminate

term.

Amendment of contract

by supplier

35.5

(1) A

distance service contract shall not contain a clause which allows the supplier

to unilaterally amend the contract unless the clause

(

a) states the elements of the distance service

contract that may be amended unilaterally;

(

b) provides that the supplier must send written

notice to the consumer, at least 30 days before the effective date of the

amendment, stating

(

i) the new or amended clause,

(ii) the former version of the clause,

(iii) the effective date of the amendment, and

(iv) the consumer's rights where he or she does not

agree with the amendment; and

(

c) provides that where the amendment increases

the consumer's obligations or reduces the supplier's obligations the consumer

may refuse the amendment and cancel the distance service contract without cost,

penalty or fees, provided the consumer gives written notice to the supplier no

later than 30 days after the effective date of the amendment.

(2) Notwithstanding subsection (1), the supplier

shall not unilaterally amend the price, term or nature of the goods or services

of a fixed term distance service contract.

(3) An amendment to a distance service contract

that contravenes this

section is invalid.

Amendment of

contract by consumer

35.6

(1) A

consumer may amend a distance service contract in relation to optional services

or, if permitted by the supplier, other services at any time without incurring

a cost, penalty or fee.

(2) Notwithstanding subsection (1), where a

consumer amends a distance service contract to add services the consumer shall

pay the fee associated with each added service.

Cancellation of

contract by supplier

35.7

(1) An

indeterminate term distance service contract shall not include a clause which

allows the supplier to unilaterally cancel the contract unless the clause

states that the contract may only be unilaterally cancelled where

(

a) the consumer fails to meet his or her

obligations under the contract; or

(

b) the supplier provides written notice of the

cancellation to the consumer at least 60 days before the cancellation date.

(2) A fixed term distance service contract shall

not include a clause which allows the supplier to unilaterally cancel the contract

unless the clause states that the contract may only be unilaterally cancelled

where

(

a) the consumer fails to meet his or her

obligations under the contract; or

(

b) the supplier no longer has the technical

ability to provide the service.

Cancellation of contract

by consumer

35.8

(1) A

consumer may cancel a distance service contract at any time for any reason by

giving written notice to the supplier.

(2) Cancellation of a distance service contract is

effective on the date the notice

is provided to the supplier unless a later date is specified in the notice.

(3) Where a supplier receives written notice under

this

section the supplier shall confirm receipt of that notice with the

consumer.

(4) Where a consumer cancels a distance service

contract under subsection (1), supplier may only charge a cancellation fee in

accordance with

section 35.9 or 35.10, and that fee shall be calculated in

accordance with the applicable section.

Cancellation fee

fixed term distance service contract

35.9

(1) Where

a consumer cancels a fixed term distance service contract, the supplier may

only charge the consumer a cancellation fee in accordance with subsection (2) or

(3).

(2) Where a supplier has provided the consumer

with a rebate on the sale price of the goods necessary for the use of the

service the maximum cancellation fee that the supplier may charge is determined

by the following formula:

C = R x M/T

Where

= maximum cancellation fee;

= amount of rebate;

= number of complete months remaining in

the contract; and

= term of the contract.

(3) Where the supplier has not provided a rebate

on the sale price of the goods necessary for the use of the service the maximum

cancellation fee that the supplier may charge is limited to the lesser of

(a) $50; or

(

b) an amount representing not more than 10% of

the amount obtained by multiplying the number of complete months remaining in

the contract by the monthly rate of the contract.

Cancellation fee

indeterminate term distance service contract

35.10

(1) Where

a consumer cancels an indeterminate term distance service contract the supplier

may only charge the consumer a cancellation fee where

(

a) the supplier allows an unpaid balance on the

sale price of the goods necessary for the use of the service in consideration

of the indeterminate term distance service contract; and

(

b) the balance is progressively reduced by a

certain amount with each month that elapses on the contract.

(2) The cancellation fee permitted in subsection

(1) shall not exceed the unpaid balance of the sale price of the goods at the

time the contract was entered into less the amount obtained by multiplying 1/48

of that balance by the number of months of the contract that have elapsed.

(3) For the purpose of subsection (2), the month

in which the contract is cancelled is considered to be a month elapsed.

Security deposit

35.11

(1) A

supplier shall return a security deposit to the consumer with interest, less

all amounts due under the contract, within 30 days of the expiration or

cancellation of the contract.

(2) Notwithstanding paragraphs 35.7(1)(

a) and

35.7(2)(a), a supplier shall not cancel a distance service contract for failure

to pay amounts owing under the contract where the consumer paid a security

deposit and the amount owing does not exceed the amount of the security

deposit.

(3) A supplier shall provide written notice to the

consumer where the supplier uses all or part of the security deposit to pay amounts

owing under the contract.

(4) For the purpose of subsection (1), interest shall

be calculated annually as the Bank of Canada rate plus 1% and interest shall be

calculated from the date the consumer provides the security deposit to the date

the supplier returns the security deposit.

Repair of goods

35.12

(1) A supplier shall not demand payment of

services that the consumer was deprived of during the repair of goods sold,

leased or supplied to the consumer at the date the contract was entered into or

during the term of the contract where

(

a) the goods are under warranty;

(

b) the goods are necessary for the use of the

services purchased; and

(

c) the supplier did not provide replacement goods

to the consumer during the repair period or provided replacement goods that

were not compatible with the purchased services.

(2) A supplier shall not charge a fee for

providing replacement goods when those goods are provided to the consumer

during the repair period of goods which are under warranty.

Warranties

35.13

(1) Information

relating to applicable warranties referred to in paragraph 35.2(1)(

p) shall be

disclosed by a supplier to a consumer both orally and in writing before the

supplier offers additional warranties to the consumer for sale.

(2) Where a supplier has disclosed information

respecting warranties under subsection (1) and that supplier is requested to do

so by a consumer, the supplier shall inform the consumer how to examine all the

other elements of the warranty.

(3) Failure to disclose applicable warranties

before offering additional warranties for sale is an unfair business practice

under subsection 7(1) of this Act.

Advertising

35.14

(1) Where a supplier advertises a price for particular goods or services, the

advertised price shall include

(

a) the total amount on a monthly or other

periodic basis that the consumer is required to pay for the goods or services,

excluding tax; or

(

b) where the consumer is not required to pay for

the goods or services on a monthly or other periodic basis, the total amount,

excluding tax, that the consumer is required to pay for the goods or services.

(2) The amount referred to in subsection (1) shall

be advertised in priority to the amounts upon which that price is based.

(3) Where a rebate is advertised, a supplier shall

specify in the advertisement that the good to which the rebate is applied is a

rebated good, not a free good.

Direct sales

contract

35.15.

(1) Where a distance

service contract is also a direct sales contract this Division and Division 1

apply.

(2) Notwithstanding subsection (1), where a distance

service contract that is also a direct sales contract is cancelled in

accordance with

section 26, the supplier shall not charge the consumer a

cancellation fee under

section 35.9 or 35.10.

Distance sales contract

35.16

(1) Where

a distance service contract is also a distance sales contract this Division and

Division 2 apply.

(2) Notwithstanding subsection (1), where a

distance service contract that is also a distance sales contract is cancelled

in accordance with

section 32, the supplier shall not charge the consumer a

cancellation fee under

section 35.9 or 35.10.

Commencement

6. This Act comes into force 3 months after the

day on which it receives Royal Assent.

William E. Parsons, Queen's Printer